The Nigeria Employers’ Consultative Association (NECA) says it is in support of fuel subsidy removal as planned by the Federal Government.
“Our position is for us to remove subsidy while you deal with the issues of the four refineries. If we make the four refineries functional, then we’ll have no business importing, and that will crash the issue of subsidy totally,” NECA Director General, Adewale Oyerinde said on Channels Television’s Sunrise Daily programme on Tuesday.
“Come to think of it, the controversy around the subsidy regime is one that some have called a scam or organised crime. When key officials in the OPS (Organised Private Sector) and key officials of government are also saying that, then it calls for deep reflection,” he added.
The NECA boss highlighted that there had been calls for a judicial inquiry to tackle the much-debated subsidy issue. He recommended that the government revisit the reasons for the non-functionality of the country’s four refineries.
“We’ve had turnaround maintenances over time. Four refineries in a country as big as ours, probably the only country in OPEC that is not refining sufficiently,” he stated.
“We believe strongly that we should do away with subsidy; it is unsustainable and it is a drain in Nigeria’s revenue. Very few people are benefiting from it, not the whole of Nigerians. But before you deal with the issue of subsidies, let’s address the low-hanging fruit, that is, fixing the refineries. We can do it.”
The Federal Government says the decision of the Organisation of Petroleum Exporting Countries (OPEC+) to cut Nigeria’s crude oil production downward by two million barrels per day was unanimous.
Minister of State Petroleum Resources, Timipre Sylva, in a statement on Tuesday, said the decision was taken by OPEC+ and its partners at their last meeting at the beginning of October.
He explained that the decision was taken for “the exclusive purpose of ensuring the long-term stability of the oil market” and to balance supply and demand.
“The decision taken by the OPEC+ during our meeting on 5th October, 2022 to voluntarily adjust crude oil production downward by two million barrels per day was unanimous. It was taken for the exclusive purpose of ensuring the long-term stability of the oil market.
“It was purely to balance supply and demand, and forestall a degeneration of the current volatile oil market to a situation where larger production cuts will be required to balance it.
The United Arab Emirates on Tuesday insisted the output cut announced this month by oil cartel OPEC and its allies, including Russia, was not politically motivated against the United States.
The 13-nation, Saudi-led OPEC cartel and its 10 allies headed by Russia angered Washington by cutting production by two million barrels a day from November, adding further upward pressure on elevated crude prices.
The decision drew a swift rebuke from the administration of President Joe Biden, which had hoped for lower prices ahead of November midterm elections, and drew criticism that Riyadh was providing Moscow with economic support that would help to finance its war in Ukraine.
Saudi Arabia has already previously insisted that the October 5 move by OPEC+ was taken “purely on economic considerations” and rejected as baseless allegations that it was politically motivated against Washington.
On Tuesday, UAE energy minister Suhail al-Mazrouei said the OPEC+ decision was “good”, and that it had made it possible to “bring prices back and stabilise them at a level close to that of October 2021”.
“I would like to reiterate that there is nothing political about any decision we take within OPEC,” he told reporters in the UAE capital Abu Dhabi, one of the largest oil exporters in the world.
However, “there was an attempt to politicise the decision, which forced many officials to clarify for the hundredth time that our decisions are technical decisions,” he added.
Each member of OPEC+ “takes into account the interest of their country and the interest of this industry, which is based on the balance between supply and demand”.
Other Gulf oil producers have also reiterated their support for the OPEC+ decision, emphasising its economic dimension. All are close allies of the West and maintain good relations with Moscow. None have publicly supported Russia’s invasion of Ukraine.
US President Joe Biden promised “consequences” for Saudi Arabia after a Riyadh-led coalition of oil-producing nations sided with Russia to slash output.
The 13-nation OPEC cartel and its 10 allies headed by Moscow angered the White House last week with its decision to cut production by two million barrels a day from November, raising fears that oil prices could soar.
“I’m not going to get into what I’d consider and what I have in mind. But there will be — there will be consequences,” Biden told CNN when pressed on possible responses in a rare televised interview.
The Democratic leader didn’t reveal what options were being considered, but the White House had made clear earlier that Biden was reassessing ties between the allies.
“I think the president’s been very clear that this is a relationship that we need to continue to re-evaluate, that we need to be willing to revisit,” National Security Council spokesman John Kirby told CNN.
“Certainly in light of the OPEC decision, I think that’s where he is.”
The OPEC move was widely seen as a diplomatic slap in the face, since Biden traveled to Saudi Arabia in July and met with Crown Prince Mohammed bin Salman, despite vowing to make the kingdom an international “pariah” following the murder of journalist Jamal Khashoggi.
It also comes at a sensitive moment for Biden’s Democratic party, as it faces November midterm elections with rising consumer prices a key Republican talking point.
Saudi Arabia has defended the planned production cuts, saying the priority of OPEC+ was “to maintain a sustainable oil market”.
On Tuesday, Saudi foreign minister Prince Faisal bin Farhan told the Al-Arabiya channel that the move “was purely economic and was taken unanimously by the (organization’s) member states.”
“OPEC+ members acted responsibly and took the appropriate decision,” he said.
Kirby added that Biden was “willing to work with Congress to think through what that relationship (with Saudi Arabia) ought to look like going forward,” although he clarified that no formal discussions had yet begun.
His remarks came a day after Bob Menendez, the Democratic chairman of the influential Senate Foreign Relations Committee, called for Washington to halt all cooperation with Riyadh.
Menendez said the kingdom had decided to “underwrite” Russia’s war in Ukraine with a move he denounced as a concession to Moscow that would hurt the global economy.
– ‘They chose Russia’ – “The United States must immediately freeze all aspects of our cooperation with Saudi Arabia, including any arms sales and security cooperation beyond what is absolutely necessary to defend US personnel and interests,” Menendez said.
“As chairman of the Senate Foreign Relations Committee, I will not greenlight any cooperation with Riyadh until the kingdom reassesses its position with respect to the war in Ukraine.”
The partnership between the United States and Saudi Arabia was sealed after World War II, providing the kingdom with military protection in exchange for American access to oil.
Fraught with crises, the relationship was revived by Biden’s predecessor Donald Trump, whose single term saw Riyadh accounting for a quarter of US arms exports, according to the Stockholm International Peace Research Institute.
Continuing the rapprochement, Biden’s State Department announced in August that Saudi Arabia would buy 300 Patriot MIM-104E missile systems, which can be used to bring down at long-range incoming ballistic and cruise missiles, as well as attacking aircraft.
The relationship is “strategic” and has “advanced the security and stability of the Middle East,” the Saudi embassy in Washington said in a statement on Tuesday.
Bilateral military cooperation “serves the interests of both countries,” it said, paraphrasing Prince Faisal’s comments to Al-Arabiya.
Saudi Arabia has faced recent rocket threats from Yemen’s Huthi rebels, who have been supplied with Iranian equipment and technology.
Biden said last week that he would look at alternatives to prevent gas price hikes.
These could include further releases from the US Strategic Petroleum Reserve, potentially increased domestic drilling, as well as more drastic measures, including limits on exports.
Menendez’s call for a freeze in arms sales has the support of several fellow Democratic lawmakers, including Connecticut’s Senator Chris Murphy, who told CNN that Washington had for too long given Riyadh a pass on transgressive conduct.
“For years we have looked the other way as Saudi Arabia has chopped up journalists, has engaged in massive political repression, for one reason: we wanted to know that when the chips were down, when there was a global crisis, that the Saudis would choose us instead of Russia,” he said.
The OPEC+ oil cartel agreed Monday to cut production for the first time in more than a year as it seeks to lift prices that have tumbled due to recession fears.
The move could irk the United States as it has pressed the group to increase output in order to bring down energy prices that have fuelled decades-high inflation.
OPEC+, a 23-nation coalition led by Saudi Arabia and Russia, had agreed to huge cuts in output in 2020 when the Covid pandemic sent oil prices crashing, but it began to increase production modestly again last year as the market improved.
Oil prices soared to almost $140 a barrel in March after Russia invaded Ukraine.
But they have since receded below $100 per barrel amid recession fears, Covid lockdowns in major consumer China and Iran nuclear talks that could bring Iranian crude back into the market.
While analysts had expected another modest increase at Monday’s ministerial meeting, OPEC+ said in a statement that it decided to reduce output by 100,000 barrels per day in October, returning to the production level of August.
The group also left the door open to holding talks prior to its next scheduled meeting on October 5 “to address market developments, if necessary”.
“First and foremost it is a clear message from the group: OPEC+ will not allow the oil price to slide. Further cuts will be initiated if necessary,” Bjarne Schieldrop, chief commodities analyst at SEB research group, told AFP.
While analysts said the cut was mostly symbolic, oil prices rose by more than three percent following the announcement, with the international benchmark, Brent, exceeding $96 per barrel while the US contract, WTI, reached almost $90.
At its last meeting, OPEC+ agreed to a small rise of 100,000 barrels per day for September after US President Joe Biden travelled to Saudi Arabia to plead for a production bump — although it was six times lower than its previous decisions.
Energy Minister Abdulaziz bin Salman last month had appeared to open the door to the idea of cutting output, which has since received the support of several member states and the cartel’s joint technical committee.
He said “volatility and thin liquidity send erroneous signals to markets at times when clarity is most needed”.
Craig Erlam, analyst at OANDA trading platform, said the cut was “also a blow to President Biden as the hike last month was viewed as a token gesture after his visit.”
“Now it’s clear how valuable that actually was, or wasn’t as it turns out. The political damage it caused was a waste and if anything, it looks worse than if nothing had changed in the first place,” Erlam said.
Caroline Bain, commodities expert at Capital Economics, said the cut was not a total surprise and “little more than symbolic” as OPEC+ has struggled to meet its quotas due to lacklustre production in some of its member countries.
“The bigger picture is that OPEC+ is producing well below its output target and this looks unlikely to change given that Angola and Nigeria, in particular, appear unable to return to pre-pandemic levels of production,” Bain said.
In efforts to curb rising oil prices, the United States and its allies have released crude from their emergency reserves.
And in a bid to curb Russia’s war funding, the G7 group of industrialised powers agreed Friday to move “urgently” towards capping the price of Russian oil.
Moscow has warned that it will no longer sell oil to countries that adopt the unprecedented mechanism.
Another geopolitical issue is clouding the outlook.
Negotiations aimed at reviving a landmark nuclear deal between Tehran and world powers could lead to an easing of oil sanctions in return for curbs to the atomic activities.
However, Washington said Thursday that Tehran’s latest response to a European Union draft was “unfortunately… not constructive”.
The OPEC+ group of oil exporters meets Wednesday to discuss another output increase, weeks after US President Joe Biden sought to persuade Saudi Arabia to boost production during a controversial visit to the country.
The White House has been pressing the oil cartel to step up production to tame prices that have surged since Russia invaded Ukraine in late February.
But the group, which is led by Saudi Arabia and Russia, has stuck to modest increases so far.
The 13-member Organization of the Petroleum Exporting Countries, along with 10 allies that include Russia, had slashed production at the height of the Covid pandemic in 2020 after a plunge in demand caused prices to sink.
The group began to raise production last year, agreeing to add 400,000 barrels per day to the market. It backed an increase of nearly 650,000 barrels per day in June, still not enough to spark a big drop in oil prices.
The alliance’s output is back to pre-virus levels, but just on paper as a few members have struggled to meet their quotas.
All eyes will be on whether OPEC+ sticks to the same output policy or steps it up.
Biden travelled to Saudi Arabia in mid-July to meet Crown Prince Mohammed bin Salman despite his promise to make the kingdom a “pariah” in the wake of the 2018 killing of journalist Jamal Khashoggi.
Part of the reason for the controversial trip was to convince Riyadh to continue loosening the production taps to stabilise the market and curb rampant inflation.
After his meetings with Saudi leaders in mid-July, Biden said he was “doing all I can” to increase the oil supply but added that concrete results would not be seen “for another couple weeks” — and it was unclear what those might be.
Wednesday’s meeting will reveal whether his efforts were successful.
“The US administration appears to be anticipating some good news but it’s hard to know whether that’s based on assurances during Biden’s trip or not,” Craig Erlam, analyst at OANDA trading platform, told AFP.
Stephen Innes, managing partner at SPI Asset Management, said it “wouldn’t be a surprise to see the Saudis announce something that Biden could tout as a win to voters at home.”
According to the London-based research institute Energy Aspects, OPEC+ could adjust its current agreement in order to keep raising crude production volumes.
However, analysts warn against expecting any drastic increases.
OPEC+ has to take into account the fact that the interests of Russia — a key player in the alliance — are diametrically opposed to those of Washington.
“Saudi Arabia has to walk a fine line,” said Tamas Varga, analyst at PVM Energy.
Any decision on Wednesday will have to be unanimous, which may lead to a longer meeting than normal.
“Any new OPEC+ deal aimed at further ramping up supplies is likely to be met with market scepticism, considering the supply constraints already evident within the alliance,” said Han Tan, chief market analyst at Exinity.
The group will decide output policy under a new secretary general, Kuwait’s Haitham Al-Ghais, who took office on Monday following the death of Nigeria’s Mohammed Barkindo last month.
“I look forward to working with all our Member Countries and our many partners around the world to ensure a sustainable and inclusive energy future which leaves no one behind,” Al-Ghais said in a statement.
“He died at about 11pm yesterday 5th July 2022. Certainly a great loss to his immediate family, the NNPC, our country Nigeria, the OPEC, and the global energy community.
“Burial arrangements will be announced shortly.”
Barkindo earlier on Tuesday had been honoured by President Buhari at the State House in Abuja for his work at OPEC.
His tenure as OPEC Secretary-General was scheduled to expire this July.
The President described him as a worthy ambassador of the country.
“You have indeed been a worthy ambassador of our country,” President Buhari was quoted as saying in a statement by his media adviser, Femi Adesina.
“We are proud of your achievements before and during your appointment at OPEC and the proud legacies you will leave behind.
“Your time in charge of the affairs of OPEC has been a very challenging one for the global oil industry. Oil producers were finding it difficult to come together to address challenges that were crippling the oil market.”
He added, “Not long after, the world was faced with the COVID-19 pandemic that sent crude prices spiralling down at an alarming rate. You showed incredible leadership to rally industry players and pushed through the turbulent times.
“There is no doubt about your efforts in putting together the Declaration of Cooperation which is the largest in the history of OPEC and the global oil industry and also the longest in duration in the history of the organization. This was a herculean task.”
The world’s top oil-producing countries will meet on Wednesday to discuss a further increase in output, while crude prices have reached seven-year highs rattled by geopolitical tensions.
Part of their regular meetings since the Covid-19 pandemic shook markets, the 13 members of the Organization of the Petroleum Exporting Countries (OPEC) and their 10 allies convene by videoconference to set output.
Many analysts expect the grouping, including Saudi Arabia and Russia, to decide to continue to boost output by 400,000 barrels per day in March.
This will be in line with their strategy to slowly re-open the taps since May last year, after drastic cuts to curb slumping prices when the coronavirus first started spreading.
“With that said, we wouldn’t completely rule out a larger increase, given high oil prices and recent OPEC+ underproduction,” Capital Economics analysts said.
Brent oil on Wednesday surpassed $90 per barrel, attaining a level last seen in October 2014.
The price of West Texas Intermediate (WTI) crude hit its highest level in more than seven years earlier this month, fuelled by easing concerns about the Omicron Covid variant and geopolitical tensions.
– Russia sanctions? –
The United States and Britain on Sunday flagged new and “devastating” economic sanctions against Russia, as Washington and its NATO allies step up efforts to deter any invasion of Ukraine.
Fears of an imminent invasion have grown in recent days, despite denials from Moscow and pleas from Ukraine’s president to avoid stirring “panic” over the massive Russian military build-up on the border.
A Russian invasion of Ukraine would lead to “very hard sanctions” against Moscow, according to Bjarne Schieldrop, analyst at SEB.
“It would halt exports of natural gas to Europe even more. Natural gas and power prices in Europe would be much higher than the current extremely high prices we have now,” he told AFP.
In the Middle East, Yemen’s Iran-backed Huthi rebels — which have frequently targeted Saudi Arabia — launched two missile attacks on the United Arab Emirates this month.
The Emirates has had a major role in the Saudi-led military coalition backing Yemen’s internationally recognised government against the Huthis.
– Struggling to meet targets –
Besides the geopolitical uncertainties, analysts have noted that OPEC nations and other key producers are struggling to meet targets to lift output by 400,000 barrels a month, adding to the upward pressure on prices.
“OPEC+ underperformance and inaction support elevated oil prices as the group has underdelivered against its stated production targets by hundreds of thousands of barrels,” Rystad Energy analyst Louise Dickson said.
The grouping “has committed to a passive role in the conversation despite external pressure primarily from the US, to increase production and ease fuel prices,” she added.
Schieldrop also noted that top producer Saudi Arabia in the last meeting “made it clear that they will not step up production beyond their cap to cover losses by other members. No rescue there.”
OPEC and its allies decided on Tuesday to maintain their policy of modestly boosting oil output next month as the rapidly spreading Omicron variant has so far not heavily hit demand.
The OPEC+ grouping, including top producers Saudi Arabia and Russia, has resisted US pressure for a wider opening of the taps in response to high energy prices fuelling a surge in inflation across the world.
The 13 members of the Organization of the Petroleum Exporting Countries (OPEC) and their 10 allies drastically slashed output in 2020 as the pandemic wreaked havoc with demand.
Last year they decided to step it up again gradually as prices recovered, while reviewing the situation every month.
After a short videoconference meeting on Tuesday, the group said it had agreed to raise output by 400,000 barrels per day in February, the same increase as in previous months.
Since demand has barely been affected by Omicron, “we have to fulfil the obligations OPEC+ has set itself in relation to boosting production, Russian Deputy Prime Minister Alexander Novak, who is responsible for energy policy, told Rossiya 24 TV.
“The decision was widely expected, and oil prices barely moved on the news,” said Caroline Bain, chief commodities economist at Capital Economics.
The price of Brent, Europe’s benchmark oil contract, rose slightly to $79.60 on the news of OPEC+’s decision, buoyed by the organisation’s optimistic outlook for demand.
Hopes for normality
The club’s members had approved a similar hike at their December meeting despite the emergence of Omicron, which had caused prices to fall as markets fretted over the Covid variant’s potential impact on the global economy.
The December decision earned the thanks of the White House, nervous of the effect of rising prices at American petrol stations, but it did not prevent crude prices from recovering considerably from their previous slump.
OPEC analysts told the group on Monday that Omicron would have a moderate impact on demand and the rise in price is expected to continue in 2022.
While the new Covid variant is spreading like wildfire around the world, it appears to be far less severe than initially feared, raising hopes that the pandemic could be overcome and life return to a little more normality.
OPEC+’s next meeting has been fixed for February 2, when members will take stock of the fast-moving developments in the pandemic.
On the eve of Tuesday’s meeting, OPEC named Kuwaiti oil executive Haitham al-Ghais to succeed Secretary-General Mohammad Barkindo on August 1.
Al-Ghais, who was Kuwait’s OPEC governor from 2017 to June 2021, is a deputy managing director of the Kuwait Petroleum Corporation (KPC).
While OPEC+ countries have been gradually increasing output again since last year, analysts note some countries, such as Nigeria and Angola, have been struggling to lift production.
“Important here is that Russia did not lift production in December which could be a sign that they are getting closer to their capacity,” SEB chief commodities analyst Bjarne Schieldrop said.
For Russia, Novak said the rise announced on Tuesday “means that from now until February we will have reversed around 85 percent of cuts in production” made in spring 2020, taking the country’s output 1.7 million bpd higher as compared with that period.
Another oil heavyweight, Iran, has seen its exports limited by US sanctions.
Talks to revive an international deal, which curbed Iran’s nuclear activities in exchange for sanctions relief, are underway in Vienna.
They have dragged on since last year but negotiators are pushing to conclude the talks to get the landmark 2015 agreement back on track.
It was thrown into disarray in 2018 when the US withdrew from the accord.
OPEC said in a statement that al-Ghais was appointed by acclamation and will take up his three-year post on August 1.
During Barkindo’s tenure, the group drastically slashed oil output in 2020 as the coronavirus pandemic hit global markets.
Last year, OPEC and 10 allies including Russia began to gradually open the tabs again, and prices have bounced back.
The Vienna-based organisation comprises 13 members led by Saudi Arabia which fix output to control prices along with the 10 other countries in a grouping dubbed OPEC+.
So far OPEC+ has resisted pressure by top oil consuming nations, such as the United States, to more aggressively boost production.
A monthly OPEC+ meeting of all 23 members via videoconference on Tuesday is expected to continue to stay the course and modestly boost output.
The OPEC general secretary has no executive power, but is the public figure of the organisation, which represents countries with divergent interests, such as Saudi Arabia and Iran.
The group in its statement credited Barkindo with being “instrumental in expanding OPEC’s historical efforts to support sustainable oil market stability through enhanced dialogue and cooperation with many energy stakeholders” in the face of the pandemic.
Major oil producers decided Thursday to keep raising output levels in January, despite the Omicron coronavirus variant raising fresh questions over demand.
The OPEC+ alliance led by Saudi Arabia and Russia had so far resisted US-led pressure to significantly boost output to rein in surging energy prices.
Observers had expected the club to opt for a freeze in production for January, particularly after the emergence of the Omicron variant sent countries rushing to impose new travel curbs and mull other measures that could dampen demand and hurt oil prices.
But after meeting for a little over an hour on Thursday afternoon via video conference, the 13 members of the Vienna-based Organization of Petroleum Exporting Countries (OPEC) and their 10 allies decided to stick with a modest increase in output of 400,000 barrels per day every month, as they have been doing since May.
The OPEC+ meeting came a week after the United States and to a lesser extent China, India and Japan decided to dip into their strategic reserves to help bring down crude prices, after a price surge that has undermined economic recovery.
“We suspect that the US-led co-ordinated release of oil reserves… was one reason why OPEC+ decided to push ahead with their plan to raise oil output,” said commodities economist Edward Gardner from Capital Economics, noting that “the group might not want to provoke further action from the large oil consumers”.
“Rather surprisingly, OPEC+ decided to go ahead with the increase, sending prices back into the red”, said Michael Hewson, chief market analyst at CMC Markets.
The decision did indeed send prices for the two benchmark oil contracts, WTI and Brent, tumbling to their lowest levels since late August at $62 and $65 per barrel respectively.
They then recovered to nearly $67 and $70, both gains on the day, but were still some way below the highs recorded in late October.
The United States welcomed the decision by OPEC+ members to increase output.
“Together with our recent coordinated release from the (strategic petroleum reserves), we believe this should help facilitate the global economic recovery,” said White House spokeswoman Jen Psaki.
Russian Deputy Prime Minister Alexander Novak told news agencies that the decision “was explained by the fact that the market is stable and that demand is recovering”.
However, he acknowledged that there was “a lot of uncertainty” linked to the Omicron variant and said that “we will — along with other countries — of course monitor the situation to see how it affects travel”.
Ann-Louise Hittle, head of oils research at Wood Mackenzie, said that “in a highly uncertain situation, the best option is to stick with the plan. That is exactly what OPEC+ has done today.”
Analysts also noted that Thursday’s meeting had been technically left “in session”, which according to Gardner “appears to be a way of leaving the door open for a change to output quotas before the next meeting in early January”.
In the run-up to the meeting, OPEC and its members had kept markets guessing as to the likely course of action.
At a technical meeting on Wednesday, OPEC Secretary General Mohammed Barkindo had “highlighted… that steady progress has been made on the global economic recovery”, but also “underscored the need to remain attentive to the prevailing uncertainties and shifting conditions, including those related to the new Covid-19 variant Omicron.”
The group’s spare capacity is some 10 times higher than the 400,000 barrels per day that it has been adding to the markets every month.
OPEC+ drastically slashed output last year as the pandemic began to unfold, and virus-related restrictions caused demand to crash.
Another variable the bloc may have to contend with in coming months is the possible return to the market of Iran if talks in Vienna lead to the revival of the 2015 nuclear deal between Tehran and world powers.
Iran’s Foreign Minister Hossein Amir-Abdollahian said Thursday a deal was “within reach if the West shows good will”.
OPEC and the oil cartel’s allies hold a key output meeting on Thursday facing new challenges as the Omicron coronavirus variant has roiled markets and other US-led nations decided to tap their strategic reserves.
The OPEC+ alliance has resisted US-led pressure to step up production to bring down surging energy prices, and the emergence of the new variant has complicated the equation.
The meeting “is shaping up to be one of the most significant since the pandemic demand recovery began, and the key signal will be how much more oil will be added to supply to start the new year,” said Peter McNally, an analyst at the Third Bridge think tank.
The detection of the new variant on Thursday caused crude prices to plunge more than 10 percent, a first since the massive drops of April 2020.
After bouncing back on Monday, oil prices fell again on Tuesday as the head of US pharmaceutical company Moderna warned that current vaccines might be less effective at fending off the Omicron variant.
Carsten Fritsch of Commerzbank said “there is much to suggest that OPEC+ will not initially step up its oil production any further” in an effort to maintain current prices at around $70 a barrel.
OPEC+ countries began slowly boosting output in May.
The group has been adding 400,000 barrels per day to the markets every month, even though its capacity is 10 times higher than that.
The alliance will discuss its output levels for early 2022 at the meeting.
No ‘hasty’ moves
Russian Deputy Prime Minister Alexander Novak, the Kremlin’s oil pointman, warned Monday against any “hasty decisions”, according to Russian news agencies.
A technical meeting was set for Tuesday ahead of the meeting but was postponed to Thursday as experts seek more information on the “current situation”, Novak said.
The conference also comes a week after the United States, China, India and Japan decided to dip into their strategic reserves to help bring down crude prices, after a surge that has undermined economic recovery.
US President Joe Biden called it a “major initiative”, with analysts estimating the injection at between 65 and 80 million barrels, including 50 million from the United States alone.
Oil prices rose despite the move, but they fell after Omicron emerged.
Iran’s possible re-entry into OPEC will be another key element in the OPEC calculus.
Iran was sidelined from OPEC in 2018 when then US president Donald Trump pulled Washington out of the 2015 nuclear accord with the Islamic republic.
After a five-month hiatus, negotiations resumed Monday in Vienna.
While most analysts are pessimistic about the outcome, Bjarne Schieldrop of Swedish bank SEB said: “Getting Iranian oil production and exports back on track is probably the best option for President Joe Biden to ease the current oil market tightness.”
Iran produced nearly four million barrels a day in 2017 — an output that dropped to around two million barrels per day last year.